Czech Republic transfer pricing rules for the recipients of investment incentives — recent court decision

Tax Controversy & Dispute Resolution ()
In the Czech Republic, specific transfer pricing rules apply to the recipients of investment incentives in the form of tax relief. A typical requirement of tax relief based investment incentives is that all transactions with related parties are conducted at arm’s length.

In a recent Czech court case, a company lost all the tax relief it had already received as a result of the purchase price of the goods in a small transaction with a related party being lower than the arm’s length price — it was held that the company had utilised a higher amount of tax relief than it was entitled to.